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“Negative interest rates can have less desirable consequences, depending on the state of the economy and the financial system,” Bank of England (BoE) Deputy Governor Dave Ramsden said on Friday. 

Additional takeaways

“Whether you get benefits from negative rates will be state-contingent.”

“Key issue for pass-through of negative rates is that deposit rates do not typically come down, especially for retail customers.”

“Negative rates are a particular issue for UK ring-fenced banks and building societies.”

“Different people on MPC will view evidence on negative rates differently.”

“There is no question at the moment of BoE using negative rates.”

“It is right for BoE to widen its policy toolkit, decide as and when if we want to consider negative rates.”

“We have the potential problem of false dawns in UK economic data, this means we need solid evidence before tightening policy.”

Market reaction

The GBP/USD pair showed no immediate reaction to these comments and was last seen rising 0.15% on the day at 1.3690.